Silicon Valley Bank Is Shut Down - Second Largest Bank Failure in History


Update 3/12/23: The FDIC just announced in this press release that there will be no losses to uninsured deposits at Silicon Valley Bank. According to the press release, "Depositors will have access to all of their money starting Monday, March 13." The FDIC also announced the closure of Signature Bank, New York, NY with a similar protection of all deposits. I'll have more details on Monday.

After more than two years without a bank failure, regulators closed Silicon Valley Bank (SVB) on Friday. SVB was the 16th largest bank in the U.S. by assets. Based on the Q4 2022 numbers, SVB had $209.0 billion in assets and $175.4 billion in deposits. The only failed bank that was larger was Washington Mutual which had $307 billion in assets before it was shut down in 2008.

Similar to IndyMac’s 2008 closure, the FDIC created a temporary bridge bank to facilitate the resolution of the bank and to ensure customers have continued access to their insured funds. According to the FDIC’s SVB press release:

To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB). At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank.

Since the FDIC wasn’t able to find a large healthy bank willing to acquire SVB, the FDIC is liquidating SVB and only covering insured deposits. In the large majority of bank failures since 2008, the FDIC has found healthy banks to acquire the failed banks and assume all of the failed banks’ deposits. In those cases even uninsured deposits were covered. That is not the case for SVB’s closure. In the press release, the FDIC described the process in which uninsured depositors will have to go through to recover their deposits:

The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.

The FDIC did not disclose the amount of uninsured deposits:

At the time of closing, the amount of deposits in excess of the insurance limits was undetermined. The amount of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers.

The amount of uninsured deposits can be estimated based on SVB’s Q4 2022 call report. In that report, it listed total deposits held in domestic offices at $161.5 billion. Only 5.69% of that amount was estimated to be insured. This is an unusually small percentage, but it makes sense since SVB primarily served startup and technology companies. It’s common for business accounts to hold over $250k.

Cause of the Failure

SVB was shut down by the California financial regulator, and they reported a run on the bank on Thursday that resulted in the withdrawal of $42 billion in deposits. According to the regulator’s findings, the Bank was “in sound financial condition prior to March 9, 2023.” Below is the excerpt from the regulator’s findings document:

On March 8, 2023, the Bank announced a loss of approximately $1.8 billion from a sale of investments (U.S. treasuries and mortgage-backed securities). On March 8, 2023, the Bank’s holding company announced it was conducting a capital raise. Despite the bank being in sound financial condition prior to March 9, 2023, investors and depositors reacted by initiating withdrawals of $42 billion in deposits from the Bank on March 9, 2023, causing a run on the Bank. As of the close of business on March 9, the bank had a negative cash balance of approximately $958 million. Despite attempts from the Bank, with the assistance of regulators, to transfer collateral from various sources, the Bank did not meet its cash letter with the Federal Reserve. The precipitous deposit withdrawal has caused the Bank to be incapable of paying its obligations as they come due, and the bank is now insolvent.

This explains why SVB failed even though its financial health numbers weren’t terrible. One thing this does show is the importance of the percentage of insured deposits held by a bank. The lower this percentage, the more likely a run on the bank will occur.

If you reviewed the latest financial health grades that we list at, you would see that the grades are based on FDIC financial data from June 30, 2022. Due to several changes in how the FDIC makes the quarterly reports available, we have not been able to import the financial data into our system. My tech team is working on a solution but the changes made are requiring the tech team to completely rewrite the import process. We should hopefully soon be able to import the latest FDIC data from December 31, 2022.

Bank Run

This WSJ piece described the run on the bank that occurred at SVB. On Wednesday, SVB was downgraded by Moody’s. On Thursday, shares of SVB plummeted, and that prompted customers to withdraw their money. The WSJ included a few examples of those involved in the bank run:

Alison Greenberg, co-founder of Los Angeles-based maternity care startup Ruth Health, was in a meeting Thursday when she got a frantic email from a seed investor.

“It basically just said ‘Things are imploding at SVB, it’s urgent that you get your money out,’” Ms. Greenberg said.

Another depositor was only partially successful in withdrawing funds:

Audrey Wu, a Ruth Health co-founder, began making transfers out of the company’s account of different denominations, hoping not to trip up any automated systems that would flag the transactions and potentially delay them.

As she prepared to carry out the final transfer from the account, SVB’s website crashed and she couldn’t log back in, she said.

Start of More Bank Failures?

Before SVB, another bank was shut down, but it was a voluntary shutdown without involvement of regulators. Silvergate Capital, the holding company of Silvergate Bank, announced on Wednesday its intent to wind down operations and liquidate Silvergate Bank. Its liquidation plan includes full repayment of all deposits. Silvergate’s downfall was due to its connection to the crypto industry.

It’s possible that we’ll see more bank failures as the effects of rising interest rates and other government policies start to negatively impact parts of the economy. Investors and depositors will be more on the edge after SVB, and other banks could be stressed when their financial weaknesses are exposed.

It would be a good time to make sure your deposits at banks and credit unions are under the FDIC and NCUA limits. You can cover over $250k at one bank, but you have to be careful to ensure that you and your bank follow the FDIC rules. Below are some references that can help you keep your deposits insured and safe:

External references: references:

Related Pages: bank health ratings

  |     |   Comment #1
When I said 7% or bust, I didn't realize it would bust so soon.
  |     |   Comment #2
Sure hope none of the Institutions mentioned on this site run into this kind of problem,.. or anything similar.
  |     |   Comment #11
****it Smitty, it's all your fault! /s
#4 - This comment has been removed for violating our comment policy.
  |     |   Comment #5
Oh man. I'm now busy trying to stuff all of this withdrawn cash into the mattress but it's getting darned lumpy. Even though it's a king size, the wife is complaining.

  |     |   Comment #6
Buy a nice combination-safe from eBay or Walmart.
Wife could do more than just complain...
  |     |   Comment #14
Lumpy mattress = wife will sleep elsewhere.Too risky.

Because you seem like a nice guy, I'm willing to hold the cash for you free of charge.
  |     |   Comment #68
That's hilarious---good sense of humor---and much needed in times like these. Thanks for the post.
  |     |   Comment #7
Hmm, looks like an example of a real, financial train wreck, when deregulation and easy-money causes it to go off the rails.

Per WaPo:  “The common theme here is regulators are not paying attention to banks related to crypto and private equity,” said Jerry Comizio, a professor at American University’s Washington College of Law. “The question is: Why didn’t the regulators step in?”
  |     |   Comment #8
milty, the regulators can not step in before hand, they are now forcing the banks to use the BAIL-IN law, to acquire the depositors assets as their own, do you see the pattern that is forming now?
  |     |   Comment #100
So what would happen to FDIC insured funds if this bail-in law was implemented? What about NCUA insured funds? What about corporate debt accounts that have no FDIC coverage? They could end up being safer right? What about stocks? The whole market could crash overnight leaving most bankrupt if anything like this were to happen. Just thinking out loud not being paranoid but I like having money spread out at various smaller banks, credit unions, corporate debt accounts and dividend paying stocks. Keeping cash in a safe @ 0% just doesn't work for me nor does holding bars of gold....just saying.
  |     |   Comment #111
deplorable_1, I know, you are very frugal with your money and are protecting them to the best of your ability, (here comes) however, it is not up to the individual investor to find ways to hide from the present perils. We all share the same FIs, the problems are the globalists that want to make us all poor and to depend on them for everything, remember Obama days, "your money are not your", "the next bank crises will reverse the losers and the banks will have a law on their side to confiscate all you money and there is where BAIL-IN law comes from".

I can not give personal advice, but I will hint on what to follow, it is called QFS, run by the white hats and it is suppose to save us from the WEF perils and protect our money. Until that happens, stay away from the big banks and the very small banks, except Wells Fargo, they have special job to do for our money in near future. The deep state are trying desperately to spread misinformation and are attacking the Wells Fargo servers on daily bases to stop for what they are designated to do.

I can not go in details on a public forum, the DS are following this blog also, so there is way out of it, just be patient and get out of the stocks too.

Disclaimer: this is a reply to deplorable_1 and the info is designated to him only. Do not reply to this info, it will not be answered back.
  |     |   Comment #114
KERRY2 wrote:
"... this is a reply to deplorable_1 and the info is designated to him only. Do not reply to this info, it will not be answered back"

Then I respectfully encourage you to use the PM feature and thus spare the rest of us.
  |     |   Comment #162
Thanks for the reply....I'll keep my ear to the ground. ; )
  |     |   Comment #38
Because everyone has their hand in the cookie jar. Heck, Bernie Madoff was once chairman of the Nasdaq, imagine that.
  |     |   Comment #9
I see health ratings here. Are there other sources of information about other banks that may be close to having these type of problems? I don't want to get caught up in anything like this. Seems like everything is great until it isn't. SVB has an "A" Rating on this site?
  |     |   Comment #12
boston61, the banks will never disclose their problem in public, everything is done behind closed doors and in secret, until the factual fail is announced.

Example, Greg Becker, President and CEO of Silicon Valley Bank, just 3 days ago had a press conference and said that everything is great and the bank is growing, everything is OK and is proud to serve the global community and is looking forward for a great year ahead.

Maybe that is the clew to be skeptical when they praise themselves.
  |     |   Comment #15
"Silicon Valley Bank Chief Executive Officer Greg Becker sold $3.6 million of company stock under a trading plan less than two weeks before the firm disclosed extensive losses that led to its failure."
  |     |   Comment #77
This is all due to the FED keeping rates at near free money for over 10 years.  They drove speculation wild. 
  |     |   Comment #13
Kinda like AM Best Insurance ratings in 2008~ when Superior Rated companies had problems and mergers started as a way to save several companies from downgrade and worse. Sometimes the ratings are just not a great tell-all.
  |     |   Comment #31
How to judge bank health 101: Did they get involved with crypto?
  |     |   Comment #40
SmittyInTheCity #31, almost every bank is involved with crypto, they are just keeping it secret and off the books. If a FI fails, they will blame it on crypto, if it continues to perform, the upper management will transfer those crypto money to themselves and quit the FI.
  |     |   Comment #39
This proves that ratings mean nothing, Moody's had rated SVB A's across the board before the meltdown.
  |     |   Comment #101
Yep which is why I don't stress out over bank ratings just keep funds below FDIC coverage limits including interest.
  |     |   Comment #118
If you have been reading Ken's blogs you would know that he wrote that his team has been working on the computers to pick up the new ratings of the banks and credit unions. I believe these ratings may be from Dec 22. Not sure though. They are no longer compatible.
  |     |   Comment #16
as Larry Summers put it, SVB had "borrowed short and lent long" into a time of rapidly rising interest rates with a steeply inverted yield curve. dwindling liquidity forced them to sell high credit quality long term bonds at depreciated prices. FWIW, he doesn't anticipate systemic risk from this bank's failure.
  |     |   Comment #18
FWIW he wouldn't admit it (publicly) if he DID anticipate systematic risk...
  |     |   Comment #19
I guess Silicon Valley Bank's health rating of "A" on the deposit accounts website didn't mean very much.
  |     |   Comment #20
Well I don’t think many saw this coming prior to the last couple of days.  The stock was trading near $270 a share 2 days before it got shutdown. Literally 48 hours poof it’s gone.
  |     |   Comment #23
I've seen a list of banks who hold a lot of long term treasury and agency debt. I've also seen a list of banks that have a high percentage of uninsured FDIC deposits. It would be interesting if Ken did a follow up article and listed banks that currently have similar books to what SVB had.
  |     |   Comment #34
I read that there was a very high percentage of uninsured deposits above FDIC coverage. It will be interesting to see how that shakes out in the weeks ahead.
  |     |   Comment #112
3 years is not long for us but when the bank needs it and you purchase them at 0 this is what happens when you have to cash them all in at once. Only one to blame is management. Even we learned with our first CD's to ladder them.
  |     |   Comment #22
mix, every bank has at least 2 sets of books (ledgers), one for the public to see and the real one is hidden from public view (where the bad investments and info is hidden from the public).
You should never rely on the rating, it is to fool the public, do your own research and read between the lines of any statement issued by that FI and never follow the investors advise. Most are paid to spread misinformation. DA relies on the public info and can not be held responsible for the rating of any FI.
  |     |   Comment #25
There is zero chance someone like myself sitting at home on my computer is going to discover anything that isn't public information.
  |     |   Comment #41
mix #25, you should try the dark web, where the real truth is mandatory.
  |     |   Comment #48
Sure, I can just imagine the actual CEO of Exon crowing about how he's sticking it to the little people at the pump, or Biden claiming he's the main diver that took out Nord Stream, or Trump's video of all the p**** he's grabbed, or Murdoch quoting his deposition that Fox news isn't true. (Oops, I think maybe that one's already on the light web.)
  |     |   Comment #52
"or Biden claiming he's the main diver that took out Nord Stream,"

He only did it because he heard CornPop was behind Nord Stream ;)
  |     |   Comment #113
Kerry 2. And you know this because- - -
You can purchase a new car today and tomorrow find out that the engine is defective or a recall has been published. No guarantees in life.
  |     |   Comment #42
Not something you can plan for based on their existing financials. Kind of like blaming a contractor for his building falling down in 9.5 magnitude earthquake. Most structures fail to survive a 9.5 magnitude earthquake, no matter how strong and "earthquake proof" you make it.

I see a lot of people commenting in this thread that are in serious need of a financial advisor! You people don't have the education in these matters to be handling your personal finances on your own! Lots of STUPID moves and Emotional Decisions appear to be looming for a lot of you!

  |     |   Comment #76
What do you mean?

Besides me breaking all my CDs today, and stuffing the money in my damp attic, in my house built 120 years ago that never had the electrical updated, what "stupid move" or "emotional decision" did I make?
  |     |   Comment #131
turn of the TV, turn of the Internet... for few days
when you turn it back on, you'll realize like me that we lost 10-20%
and our neighbors lost as much and we still ahead of our neighbors.
move or decide under duress, take a loss or pay tax, and you'll be jealous of the neighbors who were soundly asleep.
  |     |   Comment #82
Like my local financial advisor will know about banks off-the-books accounting? Or, more specifically, did they see SVB's failure coming?
  |     |   Comment #79
I would really like to know how this bank had an A rating. This means the rating system is one big joke.
  |     |   Comment #133
if you pay him/her enough he would. KPMG knew, SVB knew(read Financial statements), SVB CEO seemingly knew when he setup forward stock redemption. Moody's didn't...FDIC has legal immunity, Moody's doesn't.
in actuality Moody's directly and indirectly disproportionally contributed to SVB failure.
I expect Moody's fate to follow one of Andersen after Enron.
  |     |   Comment #21
I have a good idea, let's keep rates at near zero for 15 years, what could possibly go wrong...;)
  |     |   Comment #80
Exactly, the FED was crazy or insane one to keep rates at near zero for that long. Now, there will be payback and it's going to be ugly. Were the is smoke there is fire.
  |     |   Comment #24
SVB Financial Group (NASDAQ:SIVB)-owned Silicon Valley Bank was recommended by Cramer on his mad money show on Feb 8 2023...... the price when he recommended it was a mere $320.00, great call Cramer.
  |     |   Comment #134
Cramer is an entertainer. He is a Diamond Nest Egg of cable TV.
Cramer is not much an Analyst.
Do not fault the artist for the performance, switch the channel.
  |     |   Comment #26
"You can cover over $250k at one bank, but you have to be careful to ensure that you and your bank follow the FDIC rules."

And therein lies the rub.

You can "NEVER" be sure you are following the rules because neither the bank nor the insurer will certify that you have met the conditions necessary to be covered.

The only way to be "completely" sure that you are covered is to have $250,000 or less in any bank or credit union in the same ownership category insured under the same insurance ID.

Once you venture over that you are on your own and have no way of knowing with certainty that you will be covered in the event of a failure.

One of the problems (not the only one) is that much of the language of the insurers talks about the records of the bank or credit union and what those records must show in order for you to be insured. But you are not even able to audit the bank's records to see how they have recorded your account. So you have no control over what they show. If they made a mistake, or were careless or deceptive about conserving the records, there is no guarantee that you are not out of luck.

If you're over the minimum limit, you won't know whether you are covered until it's too late. It's a ridiculous system. It's designed to give confidence in the system, but only does so for the uninformed. Since most people are uninformed I guess it serves its purpose... Or at least has so far. A few more major bank failures could change that.
  |     |   Comment #29
You're probably OK if you have a joint account with your spouse to go up to $500,000 but I wouldn't count on things like POD or holding both individual and joint accounts to increase the limit. There are plenty of financial institutions to choose from. I currently hold accounts at 9 different banks and credit unions. Most of them are not anywhere near the maximum, but it gives me diversity in the event of trouble.
  |     |   Comment #51
"I wouldn't count on things like POD to increase the limit "
Please give me one instance where the FDIC failed to pay out on POD accounts over $250K. I have signature cards and signed bank documents detailing all my POD accounts. The paranoia on this site is off the chart.
  |     |   Comment #54
The person on your POD could die and then the insurance coverage ceases immediately. I don't see the point of playing games with titling accounts when it's much simpler to keep no more than $250,000 (or $500,000 for a couple) in each institution. Sure, you'll get your money eventually, after the FDIC has had time to sort through it all, but that could take weeks. I deal with 9 different financial institutions for my money and don't go over the limit on any of them. It isn't difficult to do.
#70 - This comment has been removed for violating our comment policy.
  |     |   Comment #73
This is obviously a fake account which I am reporting to Ken. Hopefully we can find who the real poster is and have this sick person permanently barred from this site.
  |     |   Comment #74
I think I know which poster is doing this. I have requested DA to see if the user who created this fake comment is the same person. It's not to hard to find out.
  |     |   Comment #106
Agree wholeheartedly.
It is incomprehensible when the integrity of FDIC is questioned but only to the limit that guaranties the coverage to individual poster...
sure it is possible to spread the deposits in individually comfortable increments.
as usual with the risk managements that approach will reduce the size of the impact at the cost of increased likelihood of the occurrence.
there is another solution to those who doesn't want to be exposed to the incidents of multiple SVBs,
don't be greedy, stay away from the business of earning the interest and keep savings in tier 1 banks at 0.01%
  |     |   Comment #164
I don’t count on POD either even though all my accounts are joint with two people listed as POD. I have 12 accounts total. Had 15 but just closed 3 last month. So as not to offend anyone, I am not saying I don’t trust the FDIC but I like and feel safer with many baskets in which to hold my very hard earned eggs.
  |     |   Comment #166
It's all good.
I don't count the number of the accounts, probably around 40 in total, although only quarter of them are active with more than token amounts on the deposit.
If I'm to dismiss POD coverage, I would have to spread deposits across 20 accounts.
There I would be exposed to 20 possible instances of failure. You are only exposed to 12!
Every individual is entitled to preferences, therefore every personal choice must be respected.
  |     |   Comment #43
P_D, you are forgetting the business conduct of the FI, if anything is associate with fraud, embezzlement, hack, third party making the FI to fail, hidden off the books deals, there is no recourse on your side, there is absolutely nothing can be done to make sure you will get some money over the $250k FDIC. In fact, FDIC encourages the FI to use the bail-in law to make themselves liquid by issuing you worthless stock in exchange for your deposits. FDIC is almost broke and this is just a start, in my opinion of what is to come in near future.
  |     |   Comment #46
If the bank is covered by the FDIC insurance program, and fails because of fraud or other illegal activities you listed, the depositor is covered provided they meet the terms of coverage.

In the event of a major catastrophic failure of the banking system (including a scenario that triggered bail in) I think it would be largely irrelevant whether you are covered or not as the dollars you receive from the insurer would likely be worthless anyway.

Let's hope that doesn't happen. But America is now a rudderless ship with no leadership for at least two more years on top of the two lost years we've already suffered through. And the implications of that (not only for the economy but even worse for national security and world stability) are truly terrifying. May be a good time to brush up on your Chinese because for the last two years they have been eating the American peoples' lunch and now, so emboldened and faced with a short window of opportunity before the '24 elections, the possibilities of what they are seemingly preparing to do next are beyond frightening.
  |     |   Comment #35
While it is a pain, I always maintain balances up to or below the 250k FDIC limit per account, or stack beneficiaries to increase that insurance coverage limit. 

Actually, I trust the depositors far less than the banks themselves. These bank runs are the result of depositors panicking instead of giving the bank time to work things out.  In the case of SVB, the majority of account holders were far beyond FDIC coverage limits, so they had a better case for moving money out than your typical Joe Sixpack would.  

SVB was primarily a CORPORATE Bank, with heavy involvement in Venture Capitalist and Startup activity AND Crypto/Crypto Exchange activities.  Nothing like the banks most of the people in this forum do business with.

The only way we are going to see more bank runs on "normal" banks is if FUD continues to be spread across the internet, and the usual DimBulbs start overreacting by taking their money out en masse, despite 99% of these people being fully FDIC insured.

There is a lot of STUPID out there.
#44 - This comment has been removed for violating our comment policy.
  |     |   Comment #107
no need in capitalized "stupid".
people are rightfully ignorant to the issue irrelevant to everyday life.
SVB was a Commercial Bank, mostly clearing house between small/medium tech companies and equity funds as their primary funding sources and the placeholder of companies operating funds.
most people should live happily without learning the difference between Retail and Commercial Banking
  |     |   Comment #45
Most of what I have read about SVB indicates that they failed because they borrowed short and lent (very) long. On a massive scale.

Bank asset/liability management has been around for at least 40 years. ANY reasonable use of those techniques would have significantly reduced the damage to SVB. There are plenty of tools to manage interest rate risk.

Why didn't they begin to reduce their long-end exposure a year ago when the Fed made it quite clear that they were going to do what it took to fight inflation? Did SVB choose to ignore the Fed?

Or, did they want to avoid taking a hit to their earnings? Apparently, they held the longer dated bonds in their "Hold to Maturity" portfolio and did not have to mark them to market each quarter and take the gain/loss to the bottom line. Selling them at the beginning of the tightening cycle would have been painful, but not catastrophic.

There are lot of uber-capitalists calling for a bailout - Bill Ackman and Mark Cuban to name a couple. While I feel for the depositors who exceeded the FDIC limits, my vote is Absolutely Not.

The consequences of poor risk management are a fundamental component of capitalism.
  |     |   Comment #53
This is a real problem for the start ups who need to make payroll and pay their normal day-to-day operating expenses. It would be very bad for the American economy if thousands of technology companies in our innovation sector went out of business. Anything we do to harm the technology sector, the greatest growth engine for the American economy would no doubt have many intended and unintended consequences.
  |     |   Comment #63
I personally would not include crypto in that growth engine, but that's just me.
  |     |   Comment #75
Cuban had 8 to 10 million at SVB per news reports, so of course he wants a bailout. Man up Mark!!
  |     |   Comment #135
Plenty or sound terminology, but not a single coherent point.
SVB didn't engage in subprime lending nor leveraged borrowing.
SVB could definitely do better, but @QuickSilver wasn't around to advise.
SVB followed prudent and proven business matrix, that doesn't account for the once off event when Fixed Income market prices generally diverge from overall Economy trend.
"Bank asset/liability management has been around for at least 40 years", make it about 4000+!!!
Yet, for as long as it's been around, it failed to develop not just "reasonable", but "ANY" tools that could predict and stem stampede mentality of Depositors herd.

"The consequences...are a fundamental component"? is a modern interpretation of chicken and eggs?
The consequence of chickens unprotected copulation results in fundamental component of egg.
The fundamental component of egg leads to poor risk management of chickens copulation.
SVB did mark-to-market. if SVB, or any other enterprise/chicken then convert asset into gain/loss as business SVB would have to cease to exist, and as chicken would extinct.
Please, continue to enlighten about risk management components of other social-economic models
  |     |   Comment #49
Latest news from the regulators, SVB has labilities of $212 billions and deposit/assets of $171 billion and over 39 thousands of individuals (non business customers). The FDIC can not handle that much liability and forms interim new bank DINB without assets to pay the insured to a maximum of $250k. DINB has been lend some money by undisclosed lender (maybe Elon Mask), he has big stakes in VLB and is trying to buy the VLB before goes to total liquidation. (probably to save his deposits, maybe in billions of dollars invested)
  |     |   Comment #55
REALLY??? NOT the other way around???
Both banks, forcefully and voluntarily liquidated done nothing wrong, except that their business plan and risk management portfolio was not enough diversified. Both Banks were niche players and dug for themselves graves to narrow to escape.
SVB had $200B+ in ASSETS and $170B+ in LIABILITIES/DEPOSITS.
When Depositors followed @Kerry2 news announcement and run on the Bank, SVB could NOT liquidate assets fast enough to meet withdrawal requests.
And while the Bank was sufficiently capitalized 48 hours prior to the run, once it rushed the liquidation at fire-sale prices, the Value of the ASSETS Plummeted and FED stopped processing SVB transfer messages.
It is a fundamental issue for Financial Industry where Humans at the Bank can only design and maintain the business on the assumption that mob of Humans outside would behave in predictable and self-preserving way.
if no contagion happens now, it will years to address such scenarios in the future, probably at the level of States Legislatures, likely in a way Insurance business is forced to back up each other against unanticipated events via contributions to mutual emergency funds.
DINB is backed by FDIC, FDIC is legislated by US Congress and written into US Code of Law as an institution backed by US Treasury. Therefore, push comes to shove, @Kerry2 would be forced to lend DINB some money or self-liquidate him/herself.
Be careful, some staff here is NOT stupid. It could be careless and negligent or could be the kind of staff people in China, Russia and North Korea wants us to read
  |     |   Comment #57
The FDIC has plenty of funds to cover the insured deposits. That's the way it works. What makes this bank unique is the high number of uninsured deposits which is what ultimately led to its failure. Had the percentage of insured deposits been much higher, there never would have been a run on deposits. I think the FDIC should raise the deposit limit again, but to what amount? Maybe $500k. Obviously banks would be paying more insurance premiums to bulk up the DIF to accommodate the higher risk.
  |     |   Comment #64

Not that long ago, it was only 100K. I think before 2008. I didnt even have that amount to my name yet, so it seemed like SUCH A BIG NUMBER. lol.

Now, people would need like 10-20 bank accounts! What a pain in the butt! haha
  |     |   Comment #65
Raising it to 250k just reduced the likelihood of getting even 100k back if there is a financial crisis since the FDIC doesn't have plenty of funds. And if the 250k guarantee is broken 10k is probably the best we can hope for.
  |     |   Comment #69
The change from 100k to 250k is smaller than it looks in real terms. That 100k would be worth about 140k today with inflation. If they change the number (or even if they leave it at 250k), they should change it so that it is indexed for inflation so that it doesn't fall behind so far.
  |     |   Comment #67
The issue re the uninsured deposits is on the commercial and wealth side. I'm retired now but worked at one of four national banks with large consumer banking portfolios. The banking group I worked in had a full deposit/loan portfolio with each in the range of 45 billion. Over the eight years I was in the group, the non interest bearing deposits ranged from 6 to 8 billion. We tracked the ten largest accounts for monthly reporting and they would normally range from 50 to 500 million with an occasional recognizable name. Increasing the FDIC limits wouldn't have averted what happened with SVB, although it would have ameliorated circumstances for non prudent retail customers who exceeded 250K. If customers and government want to raise FDIC limits to 500K, just realize it will cut into your rates by 5 to 15 bps. If you want increased FDIC insurance, you pay with higher premiums that will reduce deposit yields paid.
  |     |   Comment #59
KERRY2 wrote: ..."DINB has been lend some money by undisclosed lender (maybe Elon Mask), he has big stakes in VLB and is trying to buy the VLB before goes to total liquidation. (probably to save his deposits, maybe in billions of dollars invested..."

Sorry to sound ignorant, but what/who is "VLB"?
  |     |   Comment #62
V.L.B.= Very Large Businesses
  |     |   Comment #78
Thanks RichReg. I wasn't familiar with that acronym.
  |     |   Comment #58
"While acknowledging that the precise math is not immediately clear, Phillips estimated that the uninsured depositors could face losses of between 10 and 15 percent from the returns on the sales of these assets, which would be difficult for them but not catastrophic for the economy."
Bailout talk roils Washington after Silicon Valley Bank’s collapse
  |     |   Comment #60
For those who want to keep more than the FDIC limits at one institution, some banks in Massachusetts are members of the Depositors Insurance Fund, which covers "all deposits above Federal Deposit Insurance Corporation (FDIC) limits at our member banks." This should not be confused with the Deposit Insurance Fund, which is what the FDIC uses to reimburse depositors.
I don't know if there are similar insurers in other states.
  |     |   Comment #66
obviously don't get involved in 3 digit anythings with an S at the front. SVB, SBF. SOL will probably be next.
  |     |   Comment #136
this is by far most insightful and actionable comment!!!
I am being here sarcastically serious.
  |     |   Comment #84
I think one of the takeaways from this bank failure may be to stay away from fintechs. This bank was not technically a "fintech," but its unusual characteristics made it functionally similar in some ways.

My feelings about fintechs are similar to my feelings about crypto. I've always liked the idea of fintechs in principle... making banking more efficient. But in practice in the real world they have to face a lot of hurdles, have more potential for abuse and fraud, and have to slip through the regulatory cracks making them subject to government persecution which makes them risky and I would not use them.
  |     |   Comment #137
the spin of this proper takeaway is that Regulators were behind the curve dealing with fintechs and cryptos.
as controversially as it sounds to hardcore capitalists, the Regulators as FDIC, FRB and Treasury would have to be beefed up to deal with 21st Century challenges.
At the cost of the US Taxpayers, for the benefit of the USA
  |     |   Comment #85
"The Federal Deposit Insurance Corp. and the Federal Reserve are weighing creating a fund that would allow regulators to backstop more deposits at banks that run into trouble following Silicon Valley Bank’s collapse."
  |     |   Comment #86
This would help. Most people are calling for the bank to be taken over by a larger bank. About the only other person who might want to own a bank is Warren Buffett.  This next week will be an interesting one.
  |     |   Comment #87
I have several things to contribute in this arena:

First, about twenty years ago a bank wherein I had money above the FDIC insured limit went belly up. I got back the insured amount, from the FDIC, so fast it made my head spin. I wrote off the rest, but the FDIC did not. Slowly over the next two years I received, piecemeal, check after check from the FDIC. The final check was for about three bucks. It made me smile. It also made me whole. They had sent back all my uninsured deposit money.

Second, Sheila Bair appeared on TV this morning. She is a former FDIC chair, and one of her remarks was of special interest. She mentioned the importance of a financial institution's uninsured deposits percentage. In light of the SVB failure, I already yesterday had pulled up the call report of a FI where I have too much money on deposit, for purpose of running this exact check. In my case, the percentage was significantly below 10%, a good and reassuring thing. I won't write a book here about why that percentage is important. You can look this up or access Bair's remarks.  But if you have uninsured funds on deposit at whatever FI, you might want to check their call report just in case.

Third and finally, the SVB failure for us savers unfortunately adds more weight to the importance of Tuesday's February CPI release. The argument on the other side is pointing to too large a rate of increase in interest rates as having precipitated SVB. They assert the Fed should slow down. So:

Given the SVB ruckus, and if February's CPI hike is revealed more modest on Tuesday, we sadly might only get 25 basis points instead of the (at least) 50 needed to have significant chance of reining in inflation any time soon.
  |     |   Comment #91
All good points QED, but not sure a 25bp increase would be so "sad."

This bank failure raises the prospect of potential systemic consequences. Choking off the economy with more aggressive rate hikes before there is an opportunity to observe the effect could be economic suicide.

And even without the bank failure, not enough time has passed to see the full effects of the record rate increases we have already had. So you could still make a case for 25 bps.

Futures markets are still giving about a 30% chance of a 25 bps hike after the bank failed.

PS:  I once had an account in a bank that failed in the pre-Internet days.  Had to wait on line outside the bank for about 10 hours to finally get inside and see the feds.  They had a desk set up where you sat and showed ID and documentation.  Then they handed me a check for the full amount of the deposit.  It was less than the insurance cap.
  |     |   Comment #105
I had an account at Advanta. FDIC just mailed me a check for the balance.
  |     |   Comment #130
insightful to the points
to the point of the way FDIC functions.
to the point of coming FRB challenges.
Powell's task has became monumentally more difficult.
Everyone needs to be reminded that in 2008 Financial Crisis was resulted in minimum loss to taxpayers.
TARP, although unpopular and principally objective, turned out to be lucrative to US Treasury and beneficial to US Population.
  |     |   Comment #88
Might as well cancel the student debt to go along with corporate welfare
  |     |   Comment #92
Quoted from Jeffery Tucker's article in the Epoch Times:
"It’s all an extension of Fed policy to curb inflation, reversing a 13-year zero-rate policy. This of course pushed up rates in the middle and right side of the yield curve, devaluing existing bond holdings locked into older rate patterns. Investors noticed and then depositors too.
And where did SVB, and the entire banking industry, get the funds to bulk up their portfolios with such debt holdings? You guessed it: stimulus payments. Billions flooded in and it had to be parked somewhere making some return. At the time it seemed like a good deal, until Fed policy changed."
  |     |   Comment #93
“SVB CEO Greg Becker lobbied the government to relax some Dodd-Frank provisions on regional lenders in 2015. Trump did in 2018.”
  |     |   Comment #94
With bipartisan support in both the House and Senate. But sure, let's blame it all on the guy that hasn't even been in office for 26 months.

Besides, no amount of regulation is going to help when there is a $42 Billion bank run in ten hours.
  |     |   Comment #95
In 2018 the Republicans controlled the House, the Senate and the White House. Deregulation creates the conditions for bank runs by design.
  |     |   Comment #97
And 17 Democrat Senators voted in favor of the bill, so I stand by my point. Let's not just cherry pick the facts we want to talk about here to fit an agenda, that's all I'm saying.
  |     |   Comment #99
Trump chose not to veto it.
  |     |   Comment #104
The spin to deflect blame gets old. If this was a concern for the current party why wasn’t it addressed over the past 2 years. Fact is few saw this coming. And let’s see if the rich get yet another bailout under the current regime.
  |     |   Comment #98
Yeah riiiiiight!, the GOP is to be blamed for everything. Can see how the MSM brainwashes the sheeple? You forgot to blame the inflation, the Russians, the deficits, the Ukraine war and the train "accidents" on Trump also.
  |     |   Comment #102
The problem is around the corner…where are the FIs going to get the $s for/at maturity of all those short term CDs they’ve been issuing?
#108 - This comment has been removed for violating our comment policy.
#109 - This comment has been removed for violating our comment policy.
  |     |   Comment #110
  |     |   Comment #117
The rich…bank depositors north of 250k were just bailed out.  Many well into the millions.
  |     |   Comment #119
No "federal" bailout; the cost will be passed on to other banks in the FDIC system.  The banks will really push for deregulation now.
  |     |   Comment #129
Contrary...banks will, short term, push for more regulations.
Every CEO and Board would be more then willing, in current environment, to accept more overhead and lesser profit, in exchange for chance of protection and survival.
It is an instinct as a fundamental part of business psychic.
  |     |   Comment #120
Most large accounts were not individual "investors" but the cash balances of companies; of the tech, startup, internet nature and much of the $$ was employee payroll, benefits, payments to sub-contractors, landlords, invoices due, interest on loans, et all, etc.,
  |     |   Comment #121
Jeff no one said they were investors. Yet there was no assurance that they would be covered by FDIC insurance level above 250k. They were essentially bailed out…and taxpayers may end up on the hook for part of this bailout see below:

“If a sale fails, customers could collect some of their uninsured deposits as the government unwinds and liquidates the bank’s assets to repay them. But it’s not clear that the companies invested with the bank would recover all or close to all the cash they had stored at SVB through a liquidation alone – that’s why the government is reportedly looking to guarantee the deposits through a taxpayer-funded facility.“
  |     |   Comment #115
"Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law."

Seems like the FDIC will cover the uninsured deposits and charge the banks an extra insurance fee.
  |     |   Comment #127
Under the new program, the Fed said it would provide loans of up to one year to banks, savings associations, credit unions, and other eligible depository institutions in return for collateral such as U.S. Treasuries, agency debt and mortgage-backed securities.
  |     |   Comment #116
No depositor will lose any money. Just announced:

"After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.

"We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer."
  |     |   Comment #122
BTW: Like SVB, Signature Bank, NY, NY also has an overall "A" Rating! 

(Wow I hate to see the books of Banks rated just (average) "C").

wheeee, party like it's 2009!

Though both banks are rated: "C-" in CAPITALIZATION. 
It appears that the overall Health Rating is mostly meaningless. 
CAPITALIZATION and THAT rating AND trend is paramount?

This is almost funny enough to laugh at!
  |     |   Comment #125
Financial statements and ratings are lagging indicators. When something negative happens with a bank, the bank's insiders will know weeks before it appears in a financial statement. The fact that billions of dollars left SVB within a matter of hours -- much of it to one fintech, Brex -- suggests large depositors might have been acting on information that wasn't public. I wonder if there are legal implications here.
  |     |   Comment #128
Ah the hearings on cable TV soon to follow! Liz Warren outa be a hoot to hear (again)
  |     |   Comment #126
Taxpayers will be on the hook for ALL THAT INK to print new money...
  |     |   Comment #144
When you have a printing press and can print as many dollars as you want, there's no chance of "default" and you don't need to use "taxpayers' money" to tax the public. All you need to do is print money to impose the most insidious, clandestine and pernicious tax of all ... Inflation.
  |     |   Comment #148
This inflation, IMO, has mostly been caused by corporate greed, not the stimulus spending. Prices have continued to rise long after those programs ended.
  |     |   Comment #149
Milty, when you pump **trillions** of dollars into the economy (as Trump and Biden combined did) it's going to show up as inflation down the road. It doesn't happen overnight, and that you think it does (as evidenced by your claim of being after the programs ended as proof it wasn't the stimulus what done it) only shows your own ignorance of economics and how money flows through an economy. While the stimulus isn't the only factor that brought us this current inflation, it's one of the biggest factors. Absent the trillions in stimulus, inflation would be nowhere near as high as it's been.
  |     |   Comment #151
Gee, Mr. GD, like I said it was my opinion. (Just like it's yours regarding the stimulus spending.) However, I've read enough economists regarding this particular inflation to know there is no consensus as to the one-and-only cause. (If you evidence to the contrary, please post.) To think that corporations (particularly those that hold near monopolies over certain products) would never use headlines about stimulus or supply-chains as an excuse to continue to raise prices seems naive.
  |     |   Comment #160
"I've read enough economists regarding this particular inflation to know there is no consensus as to the one-and-only cause. (If you evidence to the contrary, please post.) "

I already did post on that topic, milty, and I quote myself ". While the stimulus isn't the only factor that brought us this current inflation..." Clearly I'm not saying there is a one-and-only cause (Perhaps if you had taken the time to comprehend what others are saying rather than setting up a strawman for an argument that wasn't being made, you'd have known that and I wouldn't have had to repeat myself), but that one happens to be the biggest factor (again I quote myself) "Absent the trillions in stimulus, inflation would be nowhere near as high as it's been"
  |     |   Comment #163
I appreciate you quoting yourself, but perhaps you might provide more authoritative proof (such as from Bloomsberg) regarding your claim that the stimulus spending was the "biggest factor." And since referring to your qualifier "isn't the only factor" as mitigating your claim, hopefully you will acknowledge mine ("mostly been caused") as well, and stop thinking everyone is necessarily ignorant because they have a different opinion than yours.
  |     |   Comment #171
"I appreciate you quoting yourself, but perhaps you might provide more authoritative proof"

There's no more "authoratiative (sic) proof" of your mischaracterizing what I said then what I actually said!!!!!!! To wit I did not claim a One-and-only cause any more than you did with your pinning it on corporate greed. So not only did you mischaracterize what I said, you did it why a huge helping of hypocrisy! And that has not gone unnoticed, even if I was kind enough not to mention it before you decided to dig yourself deeper.

And, BTW, a leftwing rag opinion piece, such as you love linking to, is not authoritative of anything, that you think it is, speaks volumes.
  |     |   Comment #175
Face it, it appears you have no other sources for your opinion that the stimulus is "one of the biggest factors" as to why prices are continuing to rise in 2023, which you are certainly entitled to without necessarily attacking mine and referring to it as ignorant. (Where do you get the ego?) Quoting yourself to justify your opinion, rather than showing the basis for it, is just plain.arrogant and appears to be the hallmark of your right-wing ideology. Regarding my one-and-only statement, it was from my reading of other economists (which did not include you) and was meant to support that my opinion was as valid as yours (which you appear to admit finally with "I did not claim a One-and-only cause any more than you did"). And to help you understand my view I provided a source for my opinion rather than just re-quoting myself, which you obviously didn't read. So, IMO, unless you have some proof or source or something besides your own uninformed opinion that shows that corporate greed has played no role at all in this inflation (still at 6%) then you should have stayed out of it. Therefore, learn to think before you speak, and read before your think. This hasn't gone unnoticed either.
  |     |   Comment #183
face it you can quote all the opinion prices you want and If I cared enough I could easily find an equal number of opinion pieces saying the exact opposite. All that would do is waste both our times. And since I don't need to raise other people's opinions up as some kind of "authority" in order to know what to think, I don't play that game. Shame you have to since you clearly can't think for yourself if you need to rely on such "authority" for your opinions and refuse to even try to comprehend anything that doesn't agree with that false "authority"

"which you are certainly entitled to without necessarily attacking mine and referring to it as ignorant. (Where do you get the ego?)"

It's not ego, it's simple economic knowledge (pump trillions of dollars into the economy and you are going to have a large inflation problem) which you've shown with your ignorance that you don't have (While I don't normally ever bring it up, as I neither seek to be considered an authority nor do I worship "authority" like you do, it so happens that I have a minor in economics, and I did so well in the classes he was teaching that head of the economics department once told me that he thought it was my major before seeing in my transcript that it wasn't, Guess that makes me as much of an "authority" as any of the laughable opinion pieces you worship as such).

"Quoting yourself to justify your opinion"

Apparently, Economics isn't the only thing you are ignorant about. Reading comprehension is something else you've repeatedly shown you lack. Again, I quoted myself to counter your mischaracterization of what I said and *not* as "a justification for my opinion" and here you are once again doing so. If you can't take the time to comprehend what others are saying to you, then don't waste their time replying to them as that is all your latest post has been: a colossal waste of time.

"Therefore, learn to think before you speak, and read before your think."

LOL, coming from you, who has mischaracterized what I said multiple times now, that is very rich. Does your hypocrisy have no bounds? Take your own advice: not only learn to think before you speak but also learn to read *AND COMPRHEND* before you speak. I know that last bit in bold is especially hard for you judging by your posts to date.
  |     |   Comment #185
You have a minor in economics? . . . it shows. (But by all means refer us to your well-known published articles so we can all be enlightened by your original thinking.) Again, what ego. Perhaps you can comprehend this, that the quote "Think before you speak. Read before your think" implies comprehension.

Regarding your hypocrisy radar, if you want a good example read about Randy McNally, then you'll have a better understanding of what a hypocrite truly is. Of course then you would have to read before you think and then think before you speak.
  |     |   Comment #189
" it shows"

and it shows you don't ;)

"Regarding your hypocrisy radar"

It's spot on target with you, so far nuff said.

"read about Randy McNally,"

Oooh, a whataboutism as a distraction from your own hypocrisy. How original. NOT. As far as Randy McNally goes, While I see why you'd blindly and ignorantly consider what he did as "hypocrisy" it just shows one more thing you are ignorant on. Wow a trifecta of ignorance in one thread, must be a record. Just because he's for "socially conservative laws" (including, even, Tennessee Senate Bill 3) while still enjoying interacting on social media with LGTBQWERTY+ people (even in a "racy" matter) doesn't mean he's a hypocrite, unless one of those laws was to ban adults interacting in a racy way with each other on social media (which none of the bills he supported did as far as I've been able to determine, but by all means point me to such a bill if it exists).

You do realize that there are conservatives with a conservative social view who also happen to be gays, lesbians, trans, etc who actually support "socially conservative laws" (including, even, Tennessee Senate Bill 3). There are gays that don't support gay marriage/believe in traditional marriage, There are trans that don't support drag shows in front of children, etc. Being LGTBQWERTY+ does not require one have to have a liberal view of society/oppose conservative social laws no matter how much you like to think they're one big monolithic far-left block. That's not a matter of hypocrisy, it's a matter of people having different views about how society should be run that don't line up with your far-left views.
  |     |   Comment #196
". . . doesn't mean he's a hypocrite" Ah, yes it does, in fact, it is the very definition of a hypocrite: "a feigning to be what one is not or to believe what one does not." (This is even worse when a hypocrite helps pass laws that they do not believe in.) The problem is you attack those whose comments you don't like as being ignorant or hypocrites or whatever. It seems to me, like many right-wing conservatives today, that your best defense is offense, where you have no intent of entertaining "it's a matter of people having different views." And it appears when it comes to this particular whataboutism (remember you're the one who first yelled hypocrisy), you doth protest too much, methinks.
  |     |   Comment #199
"Ah, yes it does, in fact, it is the very definition of a hypocrite: "a feigning to be what one is not or to believe what one does not."

And by that very definition, he is not. He wasn't involved in or supportive of any Drag shows (the central theme of the bill that brought the contention that he was a hypocrite when those social media posts were brought to light) or doing or supporting any of the other things in any of the other bills you'd care to name as far as I can see. Doing A when opposing B does not make one a hypocrite no matter how much you try to falsely pretend A and B are the same thing. When you catch him performing in or otherwise supporting drag shows (or doing or supporting anything else in any of those bills he supported), they we can talk about his hypocrisy. until then, it's just you deflecting from your being called out on your hypocrisy.

"And it appears when it comes to this particular whataboutism (remember you're the one who first yelled hypocrisy),"

Calling out your hypocrisy and whataboutism are two different things. what was that you were saying about "think first before speaking?" Clearly you still don't take your own advice.

Calling out someone's hypocrisy is to call out specific actions they've taken, the proper defense of which is to try to explain why those actions don't amount to hypocrisy. Whataboutism on the other hand is a deflection response when one knows they have no other defense. It's a "pay no attention to that, look over there" slight of hand. No matter how much you keep deflecting just know it doesn't work and is easily seen through.
  |     |   Comment #201
"And by that very definition, he is not." Yes, he is.
From the APnews

"Tennessee’s Republican lieutenant governor has apologized after revelations that he interacted on social media to nearly nude photos of a young gay model as well as other posts by the man and other LGBTQ personalities, even as the lawmaker has led a Senate that has passed bills targeting the LGBTQ community.
With Lt. Gov. Randy McNally as its speaker, Tennessee’s Senate has advanced and passed bans this year on gender-affirming care for transgender youth and restrictions on where certain drag shows can take place.
The 79-year-old told WTVF-TV on Thursday that he’s “really, really sorry if I’ve embarrassed my family, embarrassed my friends, embarrassed any of the members of the legislature with the posts.” "

But you, unlike Randy, don't know how to see when you're wrong. Instead you say "Doing A when opposing B" proves he's not a hypocrite, when it's really "doing A when opposing A" that's the test-- when watching drag shows (A), while opposing drag show (A). Now, I brought this up not to deflect from your accusations, but to educate you as to what real hypocrisy looks like. Your childish naming calling and accusations attacking me never had any foundation to begin with, at least that you clearly articulated as far as I can see, for me to defend against. It's hardly my fault that your minor in economics never required you to read before you write.

But you know I know it doesn't really matter what I say, you will bend over backwards to proclaim yourself the winner, and you will always believe that January 6th was a ‘normal tourist visit.'
  |     |   Comment #158
Short memory!!!
Absent of trillions- literally, no quotation marks - how would you survived self-isolated, with no job, income and kid's school? In small apartment or big house with round the clock interaction with the spouse and/or children growing to hate your everyday presence?
As much as I despise Trump and Biden and TBE, I pick the inflation down the road over the barb wire and food delivery of the government menu.
The choice was simple - be subsidized and deal with the inflation in America or eat, speak and think on the allowance in China, Russia or North Korea like.
Where once memory goes short and you complain too much, you could still allowed to eat but not to speak and to think.
Please, stop weaponizing your laptops, read Orwell again instead.
  |     |   Comment #159
Still trolling as usual I see IGR. You are arguing against a point nobody was making (IE whether or not the trillions spent was "worth" it in this particular instance). The point is, regardless of what one thinks about the necessity of the spending (a completely different topic of which mountains could be written about pro and con*), trillions pumped into the economy will have a huge impact on inflation down the line. to think otherwise isn't simply naivety, it's ignorance pure and simple.

As for Orwell, stop using his works as a guide book, they were meant to be a warning.

* on this tanget I will say this. Some amount of stimulus was needed from the government to counteract the government's own unprecedented actions of shutting in the healthy instead of quarantining the infected and exposed as is normal procedure with contagions. However, the government stimulus ranged from way overboard (Trump's too big checks going to too many people that didn't really need it rather than better targeting a smaller amount of money to those who truly did need it) to completely unnecessary (Biden's stimulus, given when the country was already back open and no longer shut in). 
  |     |   Comment #167
I will respond only once!
I owe it to myself to reflect on your pseudointellectual claims, while what you see is inconsequential to me because of your limited field of view.
"* on this tanget I will say this.".... I cant insult myself believing that you know a turd about virology "as is normal procedure with contagions"

As for Orwell, I won't blame you for the lack of comprehension, his works are not for everyone.
While lucky you GreenDream(ing) with the assurance that Orwell works "meant to be a warning", millions of people live their lives as if "his works IS(as) a guide book" under the quarantine as infected or healthy depending on GreemDreem's definition of "normal procedure". Do you remember what color of ticket Orwell assigned to "normal procedure"?
So enjoy,,, while it is "a warning". Enjoy being on this website, enjoy electing government and questioning the government you elected, enjoy being infected and not quarantined.
Enjoy the opportunity of being off "tanget" while making it personal with me.

Take an advice! Find for yourself another purpose that better suits your abilities.
  |     |   Comment #169
to conclude...
"as usual I see" GreenDream kinds asserting the freedom of passing the judgment on who need and who didn't. What is GreenDream's "a guide book" when Orwell's warning is ignored; Marx's "Capital", Mao's "Red Book" or Kim's speeches???
What is next? GreenDreams assert the right to judge who is allowed to have se!x, how often and how to apply for permission? Is that what Orwell was warning about?

I know it is in vain, but please.
Take an advice! Find for yourself another purpose that better suits your abilities.
  |     |   Comment #170
"I will respond only once!"

the troll IGR starts off with a lie (for the innumerate, making two posts in reply is *not* responding only once). and then it's all downhill from there. says it all really.
  |     |   Comment #168
Totally agree with GreenDream about why we are experiencing this unprecedented amount of inflation. And to be fair, Trump also spent far too much money with the first two stimulus bills. However, Biden's $2 trillion bonanza was the point of no return. That pushed us off the edge of the cliff. Also agree that it was totally irresponsible to shutdown the economy for an extended period of time rather than targeting the most vulnerable populations. Our govt, particularly in many of states (mostly blue states), totally ****ed it up.
  |     |   Comment #176
Reportedly, 86,850 died from Covid in Florida. I don't believe Covid has left the building yet.
  |     |   Comment #177
LOL - find the age-adjusted per capita number for Florida and compare that to the other states. Taking an aggregate number is basically useless because obviously the states with the largest populations will have higher numbers, like NY, Florida, Texas and California.
The flu and many other diseases haven't left the building either. Life is not risk-free. You can either live life scared to death of all the known and unknown risks we confront on a daily basis or live this short life fully with an understanding you can't control everything, including viruses which over 99% of the people recover from without any problems.
  |     |   Comment #178
Just wanted to note that FL (a red state) that opened earlier did not escape the pandemic. Regarding not being able to control everything hopefully does not mean that one should be situationally unaware. For example, just because smoking makes you happy, it doesn't mean you should do so in the IC ward.
  |     |   Comment #179
That's a ridiculous analogy. Denying someone their livelihood because they didn't take the vaccine or shutting down schools for two years, causing immense learning deficits for our poorest children, is a far cry from your attempt to distract from the real issues. Responding to red herrings is a waste of my time.
  |     |   Comment #181
If it's a waste of your time, then don't respond. I think the analogy is apt: smoking and Covid-19 are known killers and easily spread, and one would have to be either uninformed or politically motivated to ignore this. To date since 01/2020, over 1,100,000 have died from Covid -19 in the U.S. (Regarding loss of livelihood both political parties used stimulus spending to mitigate the financial loss, and schools used virtual classrooms.)
  |     |   Comment #182
But Florida (3rd in population) and about 1/2 the population of California and had almost twice the deaths per million people as California (first in population). Also more deaths per million people than Texas that is 2nd in population.
  |     |   Comment #186
Florida also has a larger population per capita of older people than Cali or Texas (not for nothing is Florida called the retirement capital of the US), In fact Cali and Texas rank near the bottom of states as far as percentage of retirement age population vs Florida which is all the way at the other end of that list. And as you well know the aged are the most vulnerable to dying from COVID. Once you adjust for population size, age, and other co-morbidities (in other words when you try comparing apples to apples instead of California apples to Florida oranges), Florida actually fared no better or worse than any other state.

Think about it. Take a random group of 100 healthy people in their 20s and 30s and a random group of 50 less than healthy people in their 80s and 90s. Which group do you think would show a higher number of deaths from COVID? The smart money is on the latter group despite it having half the population of the first group because the latter group has a much higher risk factor for being vulnerable to dying from COVID.
  |     |   Comment #187
Retired workers: 3,625,364 and Florida Pct of population that is retired. 16.9% (5th highest.)
  |     |   Comment #191
Pct. of population that is retired: 16.9% (5th highest)
  |     |   Comment #190
Not sure why the whole post did not show below and I cannot edit it but Florida is the 5th state with the most % of retirees at 15.9% .
  |     |   Comment #123
I see that the C-suite ****roaches sold their stock while assuring the public that "everything was fine."
  |     |   Comment #124
Insider trading MUST have accelerated and be available the past 5-6 days for these banks/inside shareholders. Geez
  |     |   Comment #132
Here's the Fed's list of biggest banks, as of December 31, 2022:

SVB was the 16th largest at the time with $209 billion in assets. Guessing the too-big-to-fail limit is no higher than $200 billion.
Signature Bank was 29th at $110 billion.
  |     |   Comment #140
I must give a credit to reader IGR and Secretary Yellen.
to myself for predicting 3 days ago the demise of Signature, setup of rescue vehicles, actions taken on the States Level and the fortune of 2 days of Markets inactivity.
to Secretary Yellen for being good student of Paulson and Bernanke, for being proactive and forcing State Regulators into action, for not reading this blog and assigning the fault to Trump or Biden, Republicans in particular or Democrats in general.
As a disclosure; due to peculiarity of my asset allocation I am way overexposed to Financials on Income and Investment sides. Next week is going to be a wild ride, because of the inertia of the fear avalanche and mob stampede mentality.
Though I am not directly exposed to current players in action, because of the bets I made in 2008 my losses over the last and coming week expected to be in the range of couple of years of average annual income. I wouldn't know how much because I am taking hiatus from checking the statements, the way I've done it through 2009.
My predictions; whoever relies on Financials for income will likely safer on the short terms, the interest paid will be frozen and dividends curtailed. The cost of the deposits will rise, the Banks will pass the cost to the Depositors as maintenance fee increase and account opening charge.
My ignorant advice: sleep on it, take a pill if you can't. Do nothing sudden out of fear or the rush of the emotions.
Don't jump the ship, it is better to cling to it measurably among measurables than freely swim alone in the waters among sharks
  |     |   Comment #138
The Fed's hiking cycle is dead and buried, and here comes the next round of massive liquidity injections, QE etc. It also means that the Fed, Treasury and FDIC have just experienced the most devastating humiliation in recent history - just last week Powell was telling Congress he could hike 50bps and here we are now using taxpayer funds to bail out banks that have collapsed. It appears the FED could care less about inflation now. It's more important to protect the liberal voters.
  |     |   Comment #139
Umm. Jimdog ... I appreciate your heated intensity, and all that, but... as a decidedly non-liberal voter, I would say -

Surely you are not conflating "liberal voters", with "those who ...

Oh, wait a second ...

Weren't you a dedicated "gold bug" in the very recent past??

OK. My point is made.
  |     |   Comment #143
For there to be humiliation they would have to have a sense of shame, which they obviously don't
  |     |   Comment #147
Liberal voters? I think not.
  |     |   Comment #141

Or….maybe she could provide competent stewardship over stockholder value and depositor assets.
  |     |   Comment #142
I really have not paid much attention to this whole thing as I did not have any money with the bank in question but it did hurt my stock investments as they are not venture crap or crypto

Now the early morning trading is up 1%+ so hopefully the market will make up what its lost in short order

Now I do wonder if I should buy a 3 or a 6 month treasury this morning or keep it in SPRXX and wait for something shorter or longer?
When in doubt- hedge so I will spend some and sit on the rest probably
  |     |   Comment #146
market turned as is down now
Crypto is up- smh
  |     |   Comment #150
1 year Treasury was 5.38% mid last week on 3/8 - today down to 4.54% - 84 basis point drop....geez??
  |     |   Comment #152
I have to believe that Sam Bankman Fried slept well last night. I think he's now pretty close to beng a free man. His depositors should be screaming full throat at the Biden Administration. I mean they just made a joke out of FDIC insurance. What's the new limit now? A bazillion dollars?  It could be argued all he did was make bad business decisions just like these clowns.  Oh if I'm Sam I am soooo happy this morning.  Granted FDIC insurance doesn't apply to Sam, but I gotta believe this chain of events will; certainly help his cause and people who lost money with him.  Maybe I'm wrong, we'll see. 
I guess what we all just witnessed is "too big to fail"
  |     |   Comment #157
I believe Bankman-Fried has more to worry about than this bank being closed.
SAMUEL BANKMAN-FRIED, 30, of Stanford, California, is charged with two counts of wire fraud conspiracy, two counts of wire fraud, and one count of conspiracy to commit money laundering, each of which carries a maximum sentence of 20 years. He is also charged with conspiracy to commit commodities fraud, conspiracy to commit securities fraud, and conspiracy to defraud the United States and commit campaign finance violations, each of which carries a maximum sentence of five years.
This was only the first set of charges. Election fraud and laundering money and other things were later charged.
  |     |   Comment #153
is it my computer or browser or is this site acting kinda wonky today. being bombarded by banking bros? Oh wait, could be a run on Ken's site! Where's my bailout money????
#154 - This comment has been removed for violating our comment policy.
  |     |   Comment #155
Hmm, suddenly we go from no bailout to something that certainly looks and sounds like a bailout. And worse yet could give the Fed the very excuse it's been looking for to cut rates. So, when Yellen says no taxpayer will be paying, she means deposit account savers will be paying for this. Now, where we are going to find a half dozen states to challenge this to the SCOTUS?
  |     |   Comment #161
Depends how one defines bailout (as the guy who nominated Yellen to the fed once (in)famously said " “It depends on what the meaning of the word ‘is’ is.").

If bailout is meant in terms of saving the banks bacon, no it's not a bailout as the money isn't going to keep the banks a float, the bank managers employed, and the bank owners/shareholders from losing out.

if, on the other hand, bailout means saving the depositors from losing the money they deposited, then yes it is a bailout as it's making sure the uninsured amounts are completely covered as well. And those uninsured amounts are huge (Roku, for one example, had some 400+ million over the 250k FDIC coverage iimit).

"So, when Yellen says no taxpayer will be paying, she means "

She means exactly what she said, the taxpayers won't be on the hook as the money isn't coming from their taxes (either now or some time in the future).

" she means deposit account savers will be paying for this"

That's ultimately how it will turn out as the money will come from the banks and where will the banks get the money? from their deposit account savers and other customers one way or another. The same way any tax on a company ultimately comes from its customers. Banks and other companies always pass their costs down to the consumer via higher prices, fees, etc. Glad to see even a lefty like you can grasp that concept once in a while.

"Now, where we are going to find a half dozen states to challenge this to the SCOTUS"

And what will their standing to sue be? If you can't convince the SCOTUS you have standing, your case will get tossed no matter the merits of the case (A point the Biden admin always argues to try to get cases against many of its unconstitutional actions thrown out of court)
  |     |   Comment #165
"Banks and other companies always pass their costs down to the consumer via higher prices, fees, etc. Glad to see even a lefty like you can grasp that concept once in a while." Once in a while? Gee, thanks. Anyway, sure business try to pass their costs on, but are not always able to depending on demand and their competition (which are concepts I'm sure you grasp). Thanks to competition and the end of easy money we're seeing banks and credit unions having to compete for depositors . . .perhaps their executives will have to accept smaller bonuses.
  |     |   Comment #173
"Anyway, sure business try to pass their costs on, but are not always able to depending on demand "

And business that can't find *some way* to pass on all their expenses to their customers risk going bust. You see businesses that don't make enough to cover all their costs are operating at a loss. Operate at a loss long enough and the business is no more. Econ 101.

" and their competition"

And what do you think their competition is going to do with the same extra expense that added taxes/fees bring them? If the government is going to add the same new expense to each bank to cover the cost of this "bail out", they're *all* going to do the same thing with it, find some way to pass it on to the customer, so competition isn't going to do much to save you from paying for this as a banking customer The customer will pay one way or the other, like it or not.

BTW,, If demand and competition are so fierce as to make a business unable to pass on added costs, then that competition and demand are already restraining them from being greedy (your excuse dujour for inflation) and from making excessive profits. Adding costs in such a situation only pushes more businesses to the brink of failure, making the borderline profitable businesses into unprofitable ones. Again econ 101.
  |     |   Comment #174
Either compete or go out of business. Econ 101. And if that means the owners or executives have to take a pay cut then so be it. Stated that "... competition and demand are already restraining them from being greedy." Maybe so, maybe not, greed uses many facilities, see Enron. However, the customer will never win if businesses do not compete, which restrains passing the cost on. Again, Econ 101.
  |     |   Comment #180
You seem to be under the delusion that all businesses operate at insanely huge profits (which frankly is very far from reality, many business opearate much closer to the margins than you realize and if those business can't, for whatever reason, raise prices when costs rise, they'll soon find themselves out of business) and that it's just greed preventing them from lowering their prices and/or making them raise prices while at the same time you are claiming that competition is so fierce that the business can't ever raise prices despite the costs being raised equally across all the businesses in the sector Your contradictory illogic is astounding.

Costs ultimately and eventually get passed on to the consumer. The simple fact is businesses need to make more then it costs them. when costs go up, so too will prices (perhaps not immediately, but eventually) because the alternative is to operate at a loss and go out of business.
  |     |   Comment #184
"'s just greed preventing them from lowering their prices and/or making them raise prices while at the same time you are claiming that competition is so fierce that the business can't ever raise prices" I never said that, that's your inference of what I am saying. If you think that businesses always operate at the lowest margins possible and never try to raise prices when opportunities avail themselves regardless of cost then you know little about monopolies (or have never dealt with the medical industry or other guild-like businesses). Your unyielding faith in the free market and its invisible hand is truly what is so astounding. Everyone should watch PBS's latest 2-hour documentary on the "Age of Easy Money," where businesses used ZIRP and QE to buy back stock to increase its price rather than invest in growth, and the Fed capitulated to the market's "temper tantrum" in 2019 and lowered rates again.
  |     |   Comment #193
" f you think that businesses always operate at the lowest margins possible"

Nope don't think that at all, But there are *many* businesses that do. Raising costs and expecting those business not to pass them on is a recipe for putting those businesses out of business.

" then you know little about monopolies"

You are moving the goal posts. We're not talking about monopolies. Monopolies have no restrictions on passing on costs. We were specifically talking about businesses with strong competition that prevents them from raising prices (which by definition would exclude monopolies). Can you not even comprehend the words you've previously used in this thread?
  |     |   Comment #194
Since you are all over the place in your arguments, lets see if we can't get you to focus.

we were specifically talking about the costs banks will be incurring as a result of the "bail out". Is it your contention that the costs will be going to
1) a monopoly (keep in mind there are over 4800 FDIC insured banks in the US) in which case, by definition there's no restriction on raising prices/passing on costs - which is contrary to your prior assertions about not being able to raise prices due to competition.
2) businesses with such fierce competition that they can't raise prices/pass on costs even when all their competitors are facing the same rise in costs - which is contrary to your recent move to talking about monopolies.

As I hope you can tell, those are mutually exclusive options by definition. Since you've been arguing against the only viable third option (that while they have competition, since everyone will be seeing the same rise in costs everyone will be passing those costs on to the customers) you are left with just those two. So please pick the one you wish to argue and stick with it because moving goal posts (like you just did by moving from strong competition to its complete opposite: a monopoly) only shows that your argument isn't built on logic or knowledge but rather on emotion and mecural whim.
  |     |   Comment #195
Surely you must admit the conversation diverged from my comment on savers not taxpayers will pick up the tab for this bailout. To which you responded "Banks and other companies "always" pass their costs down to the consumer . . . ." And that led us to debating over whether companies raise prices to see what the market can bear regardless of cost versus raising prices due only to cost. My contention (not sure how you derived those listed above) is some companies have been raising prices regardless of cost. Sure companies raise prices due to cost, if they can, but they also raise prices just because they can. Often these companies have near-monopoly power in raising their prices, especially in the food (or medical) industry. See

I was not talking only about companies that might have fierce competition. In fact, that is what we want for companies to have fierce competition so the consumer gets the best product at the lowest cost. It is the companies that lack competition that puts the consumer at risk. I really have no idea how you inferred something so different or contrary from all this.
  |     |   Comment #198
"Surely you must..."

Don't call me Shirley ;) (obligatory Airplane reference)

" My contention (not sure how you derived those listed above) is some companies have been raising prices regardless of cost"

Your contention seems to be that they (mostly) all do that based on your attributing inflation mostly to corporate greed while ignoring the trillions of dollars elephant in the room.

But back to banks and the bail out:

1) Banks are not a monopoly (so any talk about monopolies is you changing the subject away from Banks)
2) Banks do have competition
3) When the cost of all competitors rises across the board, everyone will pass on those costs however they can. because
4) failing to pass on the costs puts the business at risk of failure when prices no longer cover costs.

I think we can generally agree on the first two in regards to the 4800+ banks in the US (even if I'm sure, you'd take issue at the factual parenthetical to point 1).
It's 3 and 4 you disagree with due to your apparent (and irrational) belief that all business are greedily raising prices "just because they can" except of course when you are contradicting yourself by arguing that they won't because they can't.. either they can or they can't. pick one.
  |     |   Comment #197
"where businesses used ZIRP and QE to buy back stock "

missed commenting on this earlier. You see to have the typical myopic leftist view that buybacks are always a bad thing. While it is certainly possible to abuse them there are also legitimate reasons for a company to buy back stock than simply "increase its price" at the expense of growth.

When stock price is above the intrinsic value of a business it can makes sense for that business to raise capital by issuing new shares of the company. We saw this with AMC when the reddit crowd helped drive up the share price to levels way above the company's value, what did AMC do? they took advantage of that overprice by issuing new shares in order to raise much needed cash. That's not necessarily a bad thing (for a company) to do, and in AMC's case it probably helped keep the company in business better than taking out more loans would have.

Buy backs are simply the opposite side of that coin (same as paying off debt is the opposite side of the coin to taking out loans). When the shares are going for considerably less than the business is worth, it can make sense for a company that has the necessary cash available to buy back those discounted shares. If the price discount is large enough, doing so can actually be a greater value for the dollar than anything else they could do with the money. Once share prices recover to (and exceed) intrinsic value, the company can always (re)issue more shares if it needs/wants to.

Buybacks also help consolidate ownership which can help protect a company from a hostile takeover.

in short buybacks are neither a good or bad thing, They are simply one tool in a company's financial toolbox that can be used wisely or foolishly., Just like any other tool.
  |     |   Comment #200
@green LOL. Kareem was great in that movie! Very good analysis on buybacks. 100%
  |     |   Comment #202
"While it is certainly possible to abuse them . . ." That's the point being made in PBS Frontline's "Age of Easy Money." Businesses did abuse them, using the Great Recession and the Pandemic to enrich themselves using these government programs that were really meant to help everybody, not just the major stockholders.

Don't know if it's because of your right-wing nature, but you seem to have a propensity to see things only in absolutes--someone criticizes buybacks or corporate greed, therefore, he must always criticize all buybacks and believe all businesses are greedy, and must somehow be totally blind to all your erudition.

Regarding 3 and 4 posted above, I don't in general disagree, except businesses might be able to reduce their costs by not passing it on but rather becoming more efficient through say automation, or developing new products or new markets, for example.  But again that's not my point, it's about SOME businesses that raise prices, not because of cost increases, but because they're looking to see what the market will bear, because they can due to their monopoly or near-monopoly power.
Even as the United States continues to experience its longest economic expansion since World War II, concern is growing that soaring corporate debt will make the economy susceptible to a contraction that could get out of control. The root cause of this concern is the trillions of dollars that major U.S. corporations have spent on open-market repurchases (aka “stock buybacks”) since the financial crisis a decade ago. In 2018 alone, with corporate profits bolstered by the Tax Cuts and Jobs Act of 2017, companies in the S&P 500 Index did a combined $806 billion in buybacks, about $200 billion more than the previous record set in 2007. When companies do these buybacks, they deprive themselves of the liquidity that might help them cope when sales and profits decline in an economic downturn. Making matters worse, the proportion of buybacks funded by corporate bonds reached as high as 30% in both 2016 and 2017, according to JPMorgan Chase."
  |     |   Comment #156
Silicon Valley Bank failed just 14 days after KPMG LLP gave the lender a clean bill of health. Signature Bank went down 11 days after the accounting firm signed off on its audit.
  |     |   Comment #172
Doesn't say much for having confidence in that firm's auditing abilities.
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